The plasticizing and thermostabilizing effect of poly(ethylene glycol)–polyhedral oligomeric silsesquioxane (PEG‐POSS) on poly(vinyl chloride) (PVC) is discussed thoroughly in this work. As PEG‐POSS content increases, PVC becomes more flexible and the decomposition temperature of PVC increases slightly. Meanwhile, the temperature of maximum HCl emission is elevated from 265.3 °C in neat PVC to 285.7 °C in PVC nanocomposites, with the peak intensity of HCl emission decreased by 30.8%, and a new lower intensity of HCl emission peak appearing at much higher temperature (around 370 °C), which is in accordance with the maximum degradation temperature of PEG‐POSS. Thereby, a possible dehydrochlorination mechanism is suggested according to the fact that the electron donor effect of ether groups would stabilize the CCl bonds by means of more electron cloud stacked in those bonds, which agrees with Fourier transform infrared and X‐ray photoelectron spectroscopy experiments in terms of hydrogen bonds. © 2016 Society of Chemical Industry